In ancient Rome, Nero and subsequent emperors ran out of funds to support the empire’s massive bureaucracy and maintain its armies throughout the world. Rather than increase taxes or cut spending, they removed the precious metals in their coins. So the silver denarius became a worthless base metal with a thin silver coating. In response, merchants raised prices on goods, leading to inflation and finally hyperinflation. People stopped using coins; salaries had to be paid in food and clothing; and taxes were collected in fruits and vegetables. Only the barbarian troops hired by the emperor were paid in gold because that’s all they’d accept. Historians believe the debasement of the Roman currency was a significant factor in the fall of the empire.

Germany did not tax its citizens for the cost of World War I, choosing to borrow the money (much like our country’s financing of wars in Iraq and Afghanistan). This policy led to massive government debt by the end of the conflict in 1918. Inflation was not apparent until 1921, but eventually prices increased between a million and a billion times their previous level. The exchange rate went from four or five German Marks for one dollar to one trillion Marks for one dollar. A lawyer took out an insurance policy in 1903 and paid it faithfully for 20 years – the proceeds bought him a loaf of bread. A student at Freiburg University ordered a cup of coffee listed on a café’s menu for 5,000 Marks. He had a second cup and was given a bill for 14,000 Marks. He was told, “If you want to save money, order both cups of coffee at the same time.” Pensions, savings accounts and life insurance policies became worthless.

Could this happen here? To some degree, it already has. Consider that the cost to see the Beatles in 1965 was $5.50 – today, the price of a Hannah Montana concert is $250. Either she is a much greater talent than Lennon and McCartney, or our currency has been debased. Add the $14.7 trillion national debt (see the U.S. Debt Clock: www.usdebtclock.org) to $46 trillion in unfunded liabilities for Medicaid, Medicare and Social Security, and the U.S. debt comes to $60 trillion. No one in Congress or the White House – Republican or Democrat – has the slightest idea how to pay this off. History shows that when governments can’t pay their bills, they cheapen the currency. That’s why the question of what your money is worth could ultimately be more important than how much you have.

For more information on future inflation, see Preparing For The Coming Crash: www.philheimlich.com/videos.

I’m like you: somebody with a couple of IRA’s who wants to survive (and even prosper). So here’s my advice: forget patriotism. The government is $62 trillion in debt – when you include the national debt, along with Medicare, Social Security and Medicaid commitments. The conservatives/Tea Party, etc. say this can be paid off by cutting spending, without tax increases. The liberals recognize the need to raise taxes but aren’t willing to cut the entitlements driving the country into bankruptcy. If you trust either side to reduce the deficit and balance the budget, then keep your assets in the usual investments.

Presidential candidates always like to say America’s greatness is ahead of us. I disagree – I think it’s behind us. Historically, governments that have run up this kind of debt – the Roman Empire, post WWI Germany, among others – end up printing money and imploding in a bout of hyperinflation.

Our nation’s success in World War II and the Cold War was due as much to our economic strength as our character. If China pulls the plug on loaning us dollars to keep the nation afloat, our currency will collapse, which means the U.S. won’t have the means to pay for defense, welfare or anything else. Those who survive will be those who own foreign currencies, precious metals and other assets whose values aren’t dependent on policies out of Washington.

I remember a course in law school called Law and Economics. The professor described something called the Lifeboat theory. Essentially it says that if the ship is going down, you better recognize it and get into the lifeboats – because not everyone will make it. That’s why I’m putting my retirement accounts in gold, real estate and foreign stocks. Maybe it’s unpatriotic, but I’m more interested in protecting my family than in trusting Congress or the President to resolve the debt crisis.

The same could be asked about the United States today. Let’s compare our country’s policies with those that led to the fall of the Roman Empire.

WATCH: Preparing For The Coming Crash

In the first place, both depleted their resources — blood and treasure — to export their system of government to the world. From 400 BC to 500 AD Rome extended its power to France, Spain, the Netherlands, England, Northern Africa, Greece and the Near East. Its leaders believed that Roman politics, lifestyle and culture would benefit the nations they occupied. Conquering and defending these areas, however, required massive military expenditures to post armies along the borders of the empire. Thus, the army grew from 250,000 troops under Emperor Augustus to 600,000 under Diocletian. As one account understates it, “In some parts of the empire the Romans met resistance from local tribes.” http://www.let.leidenuniv.nl/history/migration/chapter122

This sounds a lot like U.S. efforts in the 60’s to bring democracy to Vietnam and, more recently, to Iraq and Afghanistan —in each case our armies also “met resistance from local tribes,” resulting in 58,000 American and 5 million Vietnamese deaths in Vietnam; 4,419 of our soldiers and 100,000 Iraqi civilians killed in so-called Operation Iraqi Freedom; and 1,441 dead in Operation Enduring Freedom (Afghanistan) http://projects.washingtonpost.com/fallen/iraq/. These three wars cost taxpayers $1.5 trillion.

Here’s another similarity: the growth of government. Listen to this description of Roman bureaucracy:

“…the administration of the state had grown enormously. Under Augustus, essentially, you had the imperial administration at Rome, the secondary level of administration in the governors of different provinces, and then the primary governmental units in the Roman Empire in this time were the cities.

By the time of Diocletian this pattern had broken apart. You had not one emperor, but four emperors, which meant four imperial courts, four Praetorian Guards, four palaces, four staffs, etc. Under them were four Praetorian prefectures, regional administrative units with their staffs and their budgets. Under these four prefectures, there were then 12 dioceses, each diocese having its administrative staff and so on.

Under the diocesan rulers, the vicars of the dioceses, we have the provinces. In Augustus’s time there were approximately 20 provinces. Three hundred years later, with no substantial increase in territory, there were over a hundred provinces… In other words, the cost of policing and administrating the Roman state became increasingly enormous.” http://mises.org/daily/3663

Myth #1“We elected a group of fiscal conservatives”

Truth A fiscal conservative used to be somebody who understood the principle that you can’t spend more than you take in, or as described in the famous Saturday Night Live skit featuring Steve Martin, “Don’t Buy Stuff You Can’t Afford.” [See Clip]. By that measure, Bill Clinton, who balanced the budget and passed on a surplus, was the most fiscally responsible president in recent history.

The “conservatives” elected this year are as fiscally reckless as the liberals they replaced. Republicans insist on cutting taxes; Democrats refuse to rein in social spending – in both cases deficits pile up and the bill gets passed to future generations. According to folks on the right, tax cuts are always correct because lower taxes increase revenue. But studies by the Congressional Budget Office and the Joint Committee on Taxation show that tax cuts don’t come close to paying for themselves. George W. Bush’s own Treasury Department concluded that his tax cuts would be offset by no more than 10 percent in added revenue. [Read Article].

Neither side wants to deal with the hard truth that the country is close to $62 trillion in debt ($13.7 trillion national debt, about $46 trillion in Medicare and social security commitments, $2 trillion for miscellaneous pensions). It’s much easier to promise tax cuts or pledge to protect social security than to make tough choices – like tax increases and entitlement reductions, as recommended by the chairs of the president’s deficit reduction commission [Read Article]. Real conservatives recognize that “the borrower is servant to the lender” (Proverbs 22:7) and thus are genuinely concerned that other countries –notably China – own more than $2.3 trillion of our government’s debt.

Myth #2“These newly elected fiscal conservatives will cut spending”

Truth They’ll cut spending on a few things they don’t like, like health care and food stamps. But they won’t touch military spending. In fact, the liberals are more likely to reduce the defense budget than conservatives – does that make them conservatives? That’s why almost nobody on the right – except Ron Paul – opposed the Iraq War. The price for this adventure, according to one Nobel Prize winner in economics, comes to over $3 trillion. This cost, of course, doesn’t measure the value of 4,000 American lives lost, 100,000 Iraqi civilians killed, 20,000 Americans wounded, and the increased threat from Iran because Saddam isn’t around to oppose the Iranians. The best example of both parties’ willingness to tolerate military waste is the F-35 fighter jet engine produced by General Electric. The Defense Department has been telling congress for 15 years to quit funding this, but thanks to John Boehner and other “conservatives,” over $1.5 billion has been wasted on it. [Read Article].

The spending that’s driving America to ruin is entitlements [Read Article]. We can eliminate earmarks, funding for the arts and other unnecessary expenditures, and not even make a dent in the national debt. True conservatives know that reducing Medicaid, social security, and Medicare is the only way for the U.S. to avoid national bankruptcy. Yet as Fox News’ Chris Wallace said about the Republicans’ Pledge to America, “More than forty percent of the budget (is made up of entitlements), and yet, I’ve looked through this pledge. There is not one single proposal to cut Social Security, Medicare, Medicaid.” [Read Article].

Myth #3“These conservatives are opposed to government-run health care”

TruthIn this year’s campaign, one of the principle attacks against the health care bill was that it will reduce our Medicare benefits. (E.g., according to Bloomberg News, “Senate Minority Leader Mitch McConnell, R-Ky., accused Democrats of trying to ‘raid’ Medicare. The Republican political group, Crossroads GPS, ran attack ads against Pennsylvania’s Democratic Senate candidate, Rep. Joe Sestak, charging he ‘voted to gut Medicare — a $500 billion cut.’” [Read Article].

This argument relied on senior citizens being blind to the fact that their beloved Medicare is a single-payer government-run, (i.e., Socialist) program. Only the most disingenuous politician could oppose national health care and defend Medicare at the same time. The guys we elected should make up their minds– either they’re for government-run health care or not.

Don’t expect the government to solve the debt crisis. When the going gets tough, they’ll print money – just like other countries throughout history. Buy gold – it’s your best hedge.

Our leaders want the people in China to consume more – in other words, to act like Americans. But the Chnese are too smart for that- they don’t believe in credit cards or piling up debt. They practice something we gave up a long time ago- they save.

Why do we spend millions and incarcerate thousands for selling pot? It’s less harmful than alcohol and causes far fewer deaths than smoking. Let’s take this business out of the hands of gangsters and give it to Kroger and Walmart.

Prohibiting sex offenders from living near schools or day cares makes for a good sound bite, but it does nothing to protect us.

The dollar has lost 90% of its value because the government keeps printing more of them.

Today’s Pharisees

Several Congressional members oppose federal health care while benefiting from a lavish medical plan courtesy of the taxpayers. These legislators don’t need to leave Capitol Hill to see a doctor: they can have an x-ray, get a physical or electrocardiogram, and even get a prescription filled right inside the Capitol Building.

Our leaders enjoy this “Cadillac” plan because they are members of a large pool of federal employees. This is same kind of health care exchange that’s been proposed for the uninsured which Congress refuses to pass.

Jesus saw something similar and admonished the Pharisees — the political leaders of his day — for bestowing lavish privileges on themselves while neglecting the needs of those less fortunate: “The teachers of the law and the Pharisees sit in Moses’ seat. So you must obey them and do everything they tell you. But do not do what they do, for they do not practice what they preach. They tie up heavy loads and put them on men’s shoulders, but they themselves are not willing to lift a finger to move them. Everything they do is done for men to see: They make their phylacteries wide and the tassels on their garments long; they love the place of honor at banquets and the most important seats in the synagogues.” (Matthew 23:2-6)

Is it the government’s job?

I’ve heard many “believers” say it’s the job of the church, not the government, to take care of the sick. But Proverbs 29:14 says, “If a king judges poor people fairly, his government will continue forever.”

These and other scriptures command those in power to help the less fortunate. Forty-six million Americans are without health insurance. Millions more have coverage that is wholly inadequate — so inadequate that over 60 percent of bankruptcies are due to medical bills. This need is unlikely to be met by the church or individual donors.

The Bible directs our leaders to meet this need — and do it efficiently — so as not to violate the Biblical principle of stewardship. But to do nothing is like the servant who, when given money to invest, buried it in the ground. Jesus said, “Throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.” (Matthew 25:30)